Deductibility of life insurance payments and surplus allocations follows earlier binding precedent in the assessee's own case.

The article discusses deductibility under the Income-tax Act for life insurance business: compensation paid to chief and special agents under the Life Insurance Corporation Act was treated as deductible on the basis of the assessee's earlier binding decision; refund of income-tax received in respect of erstwhile insurers' income was treated as not deductible under the First Schedule; and the portion of surplus statutorily payable to the Central Government was also treated as not deductible. The governing point is that, where identical questions have already been decided in the assessee's own case, the later reference follows that precedent and applies the same treatment to each item.

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Issues: (i) Whether compensation paid to chief agents and special agents under section 36 of the Life Insurance Corporation Act, 1956 was deductible under sections 30 to 43 of the Income-tax Act, 1961; (ii) whether refund of income-tax received in respect of the income of erstwhile insurers was allowable as a deduction under rule 2(1)(b) of the First Schedule to the Income-tax Act, 1961; and (iii) whether the portion of surplus statutorily payable to the Central Government under section 28 of the Life Insurance Corporation Act, 1956 was a permissible deduction.

Issue (i): Whether compensation paid to chief agents and special agents under section 36 of the Life Insurance Corporation Act, 1956 was deductible under sections 30 to 43 of the Income-tax Act, 1961.

Analysis: The question was answered by applying the existing decision on the same issue concerning the assessee, which had already determined the deductibility position for such compensation payments.

Conclusion: In favour of the assessee. The question was answered in the negative.

Issue (ii): Whether refund of income-tax received in respect of the income of erstwhile insurers was allowable as a deduction under rule 2(1)(b) of the First Schedule to the Income-tax Act, 1961.

Analysis: The question was governed by the earlier binding decision on the same point, which required the amount to be treated as not deductible in computing the assessee's income under the relevant schedule provision.

Conclusion: In favour of the Revenue. The question was answered in the negative.

Issue (iii): Whether the portion of surplus statutorily payable to the Central Government under section 28 of the Life Insurance Corporation Act, 1956 was a permissible deduction from the surplus for the inter-valuation period.

Analysis: The issue was likewise covered by the earlier decision of the Court on the same statutory scheme, which negatived the claim for deduction of the amount payable to the Central Government.

Conclusion: In favour of the Revenue. The question was answered in the negative.

Final Conclusion: The reference was disposed of by answering the first question for the assessee and the remaining two questions for the Revenue, with no order as to costs.

Ratio Decidendi: Where a later reference raises identical questions already settled in the assessee's own case, the Court follows the earlier binding determination and answers the questions consistently with that precedent.

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